A nudge or manipulative shove?
We can all agree that there are a few societal issues (e.g. drunk driving) that warrant behavior change and nudges from both the public and private sector. But beyond those select few “public goods” that both sides of the aisle can agree upon (and certainly there is less societal consensus nowadays on anything these days!), I have 4 serious questions about nudges.
Who gets to be the arbiter of good behavior?
Nudges are easy to support in the examples given in the article, especially when the nudge creators are elected officials with a mandate from the majority of the population. However, when the nudger is a company or a brand, it is reasonable to question its authority and its incentives.
For example: an airline suggests you buy trip insurance before completing a flight purchase knowing well that the flight is overbooked or that you are buying with a credit card that already insures the ticket. Is that acting in your best interest or just making easy money on consumer’s worries?
When Apple uses its watch to nudge you to breathe or stand several times a day, we may all agree those are worthwhile actions. But what’s in it for Apple? Should they be the authority on telling you what to do for your physical fitness or should that be a doctor? Does every good nudge come with a more subtle dependence on the Apple ecosystem?
What about a credit card company that takes out most ot the application legwork by telling consumers they are already pre-qualified for an additional credit card. That certainly can be helpful for consumers who need to credit and didn’t know that they earned enough to utilize more credit. But what about those in debt or with serious spending issues? Surely the incentive for the nudges is more to make money than to be helpful.
What’s the line between utilizing behavioral psychology and nudging?
Thaler and Sunstein tell us that nudges is any aspect of choice architecture that alters people’s behavior in a predictable way, without removing options or changing consequences. With that definition, there are many activities from e-commerce firms that seem to bridge the gap from tapping into psychology and move into nudging.
Take for example the ever present “only 1 more left in stock” or “50 other people are looking at this item” e-commerce messages using scarcity and social proof concepts. Are these subtle nudges to buy products? If we do consider these nudges, should they be subject to standards of transparency? I’d argue yes even if transparency results in nudges being less effective.
Can consumers control the nudges? What about privacy?
What if you don’t want to be nudged, especially subtly? This brings up a new point. In the digital era, there is so much more data available to make nudging personalized and ever present. I think this is where brands can really differentiate themselves. In our prior examples, Apple allows you to easily toggle alerts on or off, though arguably they do lock users in an ecosystem that it’s hard to leave entirely. Credit cards rarely allow you to opt out.
Segmentation and consumer choice seems important here, especially in financial services. Consumers can be triggered by different things even if the topic itself is non controversial. Think about a gambler being nudged to start an investment account. Or a 70 year old widow being repeatedly asked to buy life insurance for her husband. Or a grocery store worker who is choosing between “heating or eating” for his family being nudged to save for retirement. I wonder if brands could create a system to opt out similar to the GDPR regulations on marketing emails
All nudges are not created equal and another consideration should be the degree of the nudge. One example that comes to mind is the smoking cessation nudge using pictures of disease on the cigarette packs. As a non-smoker, I can see why these would be effective but there was a public outcry that this level of nudging was too much. I suspect there is a direct relationship between provocation and the effectiveness of nudges to a degree and then a tradeoff as consumers become aware of the nudge and ignore it.
In sum, nudging as a concept makes sense and can be a great way to change behavior. However, I think there are 4 big questions that need to be answered and consumers need to be given transparency and choice.
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